Fair Work Act 2009
s.526—Stand down

Kerry McDonald
v
Corporate Health Management
(C2021/7830)

Application to deal with a dispute involving stand down.

[1] On 18 November 2021, Ms Kerry McDonald (Applicant) made an application to the Fair Work Commission (Commission) under s.526 of the Fair Work Act 2009 (Cth) (FW Act) for the Commission to deal with a stand down dispute between the Applicant and Corporate Health Management (Respondent). 

[2] The application was the subject of conferences on 8 December 2021 and 13 December 2021 however the parties were not able to resolve the dispute and as such, the parties were directed to file submissions addressing the relevant sections of the FW Act, witness statements and other documentary material upon which they intended to rely. The matter was the subject of a hearing on 27 January 2022. Ms McDonald gave evidence on her own behalf at the hearing and Mr Mark Hall gave evidence for the Respondent.

Background

[3] The Applicant worked for Corporate Health Management. The Applicant was the Manager of the Optus Health Club in North Ryde which is a gymnasium open exclusively to employees of Optus. The Applicant worked 26 hours per week in this role immediately before 29 September 2021.

[4] The Respondent has two main divisions, one being its gymnasium/wellness centre division and the other being its occupational/allied health division. The Respondent’s structure also includes support teams in areas such as finance, information technology, marketing, administration and management. The Respondent says it employs approximately 120 employees of which 75 are in the gymnasium/wellness centre division.  

[5] The Respondent has been impacted by the COVID-19 pandemic and was required to close its gymnasiums at various junctures during the pandemic due to Government mandated lockdowns.  

[6] From August 2021, New South Wales Government public health orders required that the Respondent close its gymnasiums, including the Optus Health Club and the entity that contracted the Respondent to operate the Optus Health Club required that it temporarily cease operation. Despite the mandated closure, the Respondent continued to pay the Applicant from 9 August 2021 until 29 September 2021 when it wrote to the Applicant as follows:

“I am writing to inform you that, due to government directives to close down non-essential services during the Coronavirus pandemic lockdown, you have been stood down without pay for your employment under the provisions of s.524 of the Fair Work Act. 

You will continue to accumulate leave entitlements as normal during this period and you may take paid annual leave during this time that has been authorized by CHM Corporate Health Management. 

Your period of stand down is effective from 29^th September 2021 until further notice which will rely on government and contract partner directions on the date when resumption of business will be possible. 

You can use this letter as documentary evidence as having been stood down from your employment when applying for Government assistance, such as Jobseeker allowance, COVID-19 Disaster Payment, Parenting Payment or Youth Allowance, via Services Australia.

Please take care of yourself during the stand down and we look forward to having you re-join our business when we resume normal operations.

Thank you for your understanding during this time.” 

[7] The Respondent submitted that after it stood the Applicant down it explored whether the Applicant would like to undertake online exercise classes. The Applicant submitted that she was offered this role after the person performing it had a motorcycle accident and that the offer for her to undertake online exercise classes was not appropriate given her role as a manager, rather than a class instructor. In particular, the Applicant submitted that she refused to take on this role as she:

● was not trained to do online classes;

● had no equipment to record and present the classes;

● had no separate room in her home to facilitate filming of the classes;

● had no company computer or phone; and

● had no information as to the market that she would be presenting to.

[8] The Applicant submitted that there was other work she could have undertaken for the Respondent during the period of stand down and she offered to help with:

● new business development;

● learning new things in the business;

● outstanding accounts collection.

[9] The Applicant also submitted that during the period of lockdown there was a promotion of a staff member to the new role of Marketing Manager and this role was not advertised or offered to her.

[10] The Respondent submitted that the only other work available during the time of the stand down was occupational health work, however it was not appropriate for the Applicant to undertake this work as it required qualified health professionals (i.e. doctors and nurses) to carry out this work.

[11] The Respondent submitted that it offered the Applicant the opportunity to access her paid annual leave during the stand down and she elected not to do so. Emails from the Respondent’s Payroll Officer to the Applicant dated 4 October 2021 make enquiries with the Applicant as to whether she wanted to access paid annual leave and suggests the Applicant had accrued an annual leave balance of 387.25 hours and a long service leave balance of 178.72 hours. A response to that email from the Applicant sent to the Payroll Officer on 4 October 2021 states that “At this stage I do not want to use my annual leave”. A further email from the Respondent’s Account’s Department on 22 October 2021 to the Applicant indicates that as at 22 October 2021 the Applicant’s annual leave balance was 377.59 hours (a slightly lower balance than previously communicated by the Payroll Officer) and informed the Applicant that given the COVID-19 government payments were to be reduced within the next two weeks, she may access her paid annual leave entitlements.

[12] The Applicant also noted that the entity that contracted the Respondent to run the Optus Health Club paid the Respondent a retainer to hold the contract during the closure and understands this amount to be $4,000.00 per month. The Applicant has raised concern that she was not paid any of this amount during the stand down. The Respondent submitted that the Respondent incurs a range of operating expenses and overheads and that the payment is not reserved for wages, and Mr Hall gave evidence to this effect at the hearing. The Respondent submitted that it has had to stand down most of the gymnasium employees for at least 16 months during the pandemic as the gymnasiums were not open due to government mandated lockdowns in place to protect the health and safety of the community. The Respondent further submitted that it suffered significant financial loss during the pandemic which has resulted in it having to secure funds from outside the business. The Respondent submitted that it has lost several employees due to the closure and this would come at a considerable cost as the Respondent would have to employ and train new staff.

[13] The Respondent anticipated that the Optus Health Club would reopen in April 2022 and it would require a manager upon reopening. The Respondent submitted that it had hoped that the Applicant would return to work in her role upon reopening, however the Applicant resigned from her employment on 22 November 2021 to start in a new role with a start date of 13 December 2021, which was delayed until 10 January 2022. The Applicant submitted that she needed to find new employment because she had no income from 29 September 2021.

[14] The Applicant seeks to be paid for the period between 30 September 2021 until 31 January 2022. The Applicant’s application also seeks alternative relief, being that she be offered a redundancy payment.

Legislation

[15] Part 3-5 of the FW Act relates to stand down. Specifically, s.524 provides for when an employer may stand down employees:

(1) An employer may, under this subsection, stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances:

(a) industrial action (other than industrial action organised or engaged in by the employer);

(b) a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown;

(c) a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

(2) However, an employer may not stand down an employee under subsection (1) during a period in which the employee cannot usefully be employed because of a circumstance referred to in that subsection if:

(a) an enterprise agreement, or a contract of employment applies to the employer and the employee; and

(b) the agreement or contract provides for the employer to stand down the employee during that period if the employee cannot usefully be employed during that period because of that circumstance.

Note 1: If an employer may not stand down an employee under subsection (1), the employer may be able to stand down the employee in accordance with the enterprise agreement or the contract of employment.

Note 2: An enterprise agreement or a contract of employment may also include terms that impose additional requirements that an employer must meet before standing down an employee (for example requirements relating to consultation or notice).

(3) If an employer stands down an employee during a period under subsection (1), the employer is not required to make payments to the employee for that period.

[16] Section 526 provides for when the Commission may deal with such a dispute:

(1) The FWC may deal with a dispute about the operation of this Part.

(2) The FWC may deal with the dispute by arbitration.

…

(3) The FWC may deal with the dispute only on application by any of the following:

(a) an employee who has been, or is going to be, stood down under subsection 524(1) (or purportedly under subsection 524(1)); ...

(4) In dealing with the dispute, the FWC must take into account fairness between the parties concerned.

Consideration

[17] I have taken into account all of the submissions that have been provide by the parties. The fact that a submission or issue is not mentioned in this decision does not mean that it has not been considered.

[18] In order for a stand down of an employee to be authorised by s.524(1), two conditions must be satisfied:

(1) the employee cannot be usefully employed during the period of the standdown; and

(2) this must be because of one of the circumstances in paragraphs (a), (b) or (c) of s.524(1). 1

[19] The Respondent has not sought to rely on ss.524(1)(a) and (b) of the FW Act and I am satisfied the circumstances in s.524(1)(a) and (b) of the FW Act (i.e. industrial action (other than industrial action organised or engaged in by the employer and a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown) do not arise in the circumstances of this matter.

[20] Where s.524(1)(c) is the relevant circumstance relied upon, two elements must be satisfied:

(a) there must have been a stoppage of work; and

(b) the employer cannot reasonably be held responsible for the stoppage. 2

Could the Applicant usefully be employed during the relevant period?

[21] The Explanatory Memorandum for the Fair Work Bill 2008, states:

“An employer can only stand down an employee if they cannot be usefully employed. If the employer is able to obtain some benefit or value for the work that could be performed by an employee then the employer would not be able to stand down an employee.”

[22] In The Peninsula School t/a Peninsula Grammar School v Independent Education Union of Australia 3 a Full Bench of the Commission had regard to this in finding:

“[33]….An employee may be usefully employed, notwithstanding that the employee cannot perform their normal duties, if alternative duties of benefit to the employer are available to be performed. In Re Carpenters and Joiners Award, the plurality of the Commonwealth Industrial Court (Spicer CJ and Smithers J) said:

“An employee cannot be said to be one who cannot be usefully employed if there is useful work available the performance of which is within the terms of his contract of employment, although work of the class upon which he is usually employed or was last employed is not available.

[34] Spicer CJ and Smithers J went on to qualify the above by saying:

“...The expression ‘usefully employed’ necessarily connotes that by the employment in contemplation there will be a net benefit to the employer’s business by reason of the performance of the particular work done. If the performance of the work done will prejudice the conduct of the employer’s business then it is not useful to him although the work in itself would probably, to some extent, contribute to production”.

[23] It is necessary to consider if the Respondent could not usefully employ the Applicant.

[24] During the hearing, the Applicant submitted that there was work she could do during the relevant period and gave evidence that that she undertook an online course in wellness training in March 2020 and was a health professional. The Applicant submitted that she could have done work related to her qualifications and that there was also other work that she could have been trained to do. The Applicant submitted she could have done wellness coaching online, follow up of accounts, business development, outdoor classes or preparing newsletters and fact sheets for the Respondent’s “wellness rollout”. The Applicant also referred to a person being promoted into a marketing role.

[25] Mr Hall of the Respondent gave evidence that there were no positions available for the Applicant that matched her skill set. Mr Hall’s evidence at the hearing was that the promotion of the person to the position of “Head of Marketing” was given to an employee who was employed as Head of Graphic Design, who had already been acting in that role, and who had a degree in marketing and that the promotion was a way to recognise this. Mr Hall also gave evidence that the role was advertised. Mr Hall’s evidence was that content for the wellness rollout was sourced from a third party contractor (written by experts such as dieticians) and while repackaged by the graphic design team, did not require the creation of new content. Mr Hall’s evidence was that the Respondent continued to pay the Applicant at the beginning of the Optus Health Club’s closure, that he was trying to find productive things for the Applicant to do and that he found her some work activities to do initially such as calling members on the membership list to keep them engaged, however ultimately there was not enough work that he could offer to fill the Applicant’s hours of work to prevent the stand down. Mr Hall’s evidence was that he delayed the stand down as long as he could but work for the Applicant was not there. Mr Hall also gave evidence that he explored a role in Melbourne with the Applicant relating to a site for Toyota that was proposed to be opened in December 2021 however that opening date was pushed back and he understood it was a “long shot”. The Applicant’s evidence during the hearing was that a brief conversation about the role was had but that she had limited details about it and indicated to Mr Hall that it wouldn’t be suitable because she’d have to move her family to Melbourne.

[26] Given the nature of the Respondent’s business, I accept that the impacts of COVID-19 and in particular, the need for extended closure of and disruptions to its gymnasiums meant that alternative employment opportunities for impacted employees would have been limited during the relevant period. I accept the Applicant is unlikely to have been able to carry out online classes if she was not appropriately trained as an instructor and I accept that there was no other suitable work available for the Applicant to carry out for the Respondent from 29 September 2021. In the circumstances of this matter, I find that the Applicant could not usefully be employed by the Respondent during the relevant period.

Was there a stoppage of work?

[27] The causal relationship between the stoppage and stand down was set out in Australian Federation of Air Pilots v Bristow Helicopters Australia Pty Ltd where Commissioner Cambridge said: 4

“...the mere existence of a breakdown of machinery or equipment and/or a stoppage of work for which the employer cannot reasonably be held responsible, is not sufficient to establish the circumstances which satisfy subsection 524 (1) of the Act. There must be a direct causal connection between ...the stoppage of work, and the absence of useful work for the employee who is stood down. Thus, the absence of useful work created by a breakdown of machinery or equipment and/or a stoppage of work must be the cause of any stand down”.

[28] This was affirmed on appeal by the Full Bench. 5

[29] In considering what constitutes a ‘stoppage of work’ in City of Wanneroo v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, Williams C applied the dictionary definition, stating: 6

“The Macquarie Dictionary Online 2008 relevantly defines “stoppage” as:

1. the act of stopping; cessation of activity, etc

...

4. a cessation of work as a protest; strike: a twenty-four hour stoppage.”

[30] In the circumstances of this matter, the Respondent was the subject of public health orders that required it to cease operation of the Optus Health Club in North Ryde which is a gymnasium open exclusively to employees of Optus. Further, the entity contracting the Respondent to operate the gymnasium directed that the Respondent not operate the gymnasium during the relevant period. The Applicant confirmed during the hearing that she did not dispute that there had been a stoppage of work. It is clear that Optus Health Club ceased operation and I find that this amounts to a stoppage of work.

Is there a stoppage of work for a cause for which the Respondent cannot be held responsible?

[31] Having found that the work had stopped, it is necessary to consider if the stoppage is for a cause for which the Respondent cannot be held responsible. I find that the causes of the stoppage of work were the public health orders giving rise to the stoppage and the direction of Optus that the gymnasium close due to the circumstances arising from the COVID-19 pandemic. The Applicant confirmed during the hearing that she did not dispute that there had been a stoppage of work and that this was a matter beyond the Respondent’s control. I find that there was a stoppage of work for causes for which the employer cannot reasonably be held responsible.

[32] In the circumstances of this matter, I find that the Applicant could not usefully be employed because of a stoppage of work for causes for which the employer cannot reasonably be held responsible.

Fairness between the parties

[33] I am required to consider fairness as between the parties in my determination of this matter.

[34] I accept that the effect of the stand down of the Applicant between 29 September 2021 and the commencement of her new employment would have given rise to a difficult and uncertain time for the Applicant.

[35] However, in the circumstances of this matter, the operation of a public health order imposed by the government and the impacts of COVID-19 meant that the Respondent was unable to operate the Optus Health Club of which she was the Manager. The Applicant had accrued a significant annual leave balance and was given the option to request to use her accrued leave entitlements during the stand down period which would have mitigated the negative financial impact associated with the stand down, however the Applicant declined to access her leave. I accept the $4,000.00 per month retainer payment made to the Respondent by the entity contracting it to operate the Optus Health Club was not reserved for the Applicant’s wages. I also accept that the Respondent paid the Applicant from 9 August 2021 until the commencement of the stand down, even though it was not able to operate the Optus Health Club, and that it was seeking to have the Applicant return to work when the Optus Health Club was able to reopen in 2022.

[36] Taking into account fairness between the parties, I find that the considerations of fairness weigh against the orders sought by the Applicant being made.

Conclusion

[37] I find the stand down was in accordance with to s.524 of the FW Act and for the reasons above therefore decline to make the orders sought by the Applicant and dismiss the application.

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Appearances:

Ms K McDonald on her own behalf.

Mr M Hall on behalf of the Respondent.

Hearing details:

2022.

Sydney (by Video using Microsoft Teams)

27 January.

 1   The Peninsula School t/a Peninsula Grammar School v Independent Education Union of Australia [2021] FWCFB 844 at [31].

 2   Ibid at [32].

 3   [2021] FWCFB 844 at [33].

 4   [2016] FWC 8515 at [53].

 5   [2017] FWCFB 487 at [37].

 6   [2008] AIRC 135 [30] – [31].